TaxTMI 
TaxTMI 
2019 (6) TMI 1151
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..... 1,71,00,000/- [pertaining to Muzrai Funds] at Vijaya Bank, Chintamani Branch for a period of One year. The CEO approved the proposal to keep the funds in FD based on the office note put up before him. The office note put up by Accounts Department was approved by Accounts Superintendent stating that it may be approved. The file was put up before A/s F who also accepted opening of FD at Vijaya Bank, Chintamani Branch. The file was further placed before Chief Accounts Officer who also marked the proposal to CEO. The CEO also accepted at Sl.No.58 of the Note Sheet by affixing his signature. c). The Karnataka State Board of AUQAF [hereinafter referred to as 'Wakf Board' for short] executed two cheques. The first cheque was drawn on "Vijaya Bank, Chintamani Br" dated 26.12.2016 for an amount of Rs. 2,29,45,465/- which cheque was signed by the Chief Executive Officer with an endorsement behind the cheque stating "FD in favour of CEO, KSBW. Unit Khalifathur Rehman Dargah, Gulbarga". d). The second cheque was also drawn on "Vijaya Bank, Chintamani Br" for an amount of Rs. 1,71,00,000/- on 26.12.2016 and signed by Chief Executive Officer. This cheque also had the following endorsement ....
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....n, b. That on the basis of complaint filed by the CEO of Wakf Board a Criminal Case was registered by Chintamani Town Police against a. Smt. A Susheela, Bank Manager, b) Shri. Marukanappa, Assistant Branch Manager and c) Shri. Siraj Ahmed the First Division Assistant and Cashier of the Wakf Board. The Criminal Case invokes the provisions of sections 120-B read with sections 420, 467, 468 and 471 of IPC which is a Scheduled offence under Prevention of Money Laundering Act, 2002. 7. That a case was registered by the Respondent Authority in File No.ECIR/BGZO/04/2017 on 12.1.2017 to investigate the case. The allegations in the FIR have been noted in the complaint. The same are that during the course of investigation, the following was revealed: I. The Wakf Board received a proposal on 15.10.2016 for keeping FD of Rs. 10 crores for one month by the Bank Manager of Vijaya Bank, Chintamani Branch wherein an interest rate of 7.5% was promised. II. There is no entry inward of the letter sent by the Bank in the inward register of Wakf Board and the proposal to deposit the money in FD with Vijaya Bank, Chintamani was put up by the First Division Assistant and Cashier which was accepted....
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....65/- was effected to third party M/s. Ajay Sharma Trading Corporation on 21.12.2016 itself. X. The statement was also taken from the CEO of Wakf Board who had narrated the complete facts. XI. The complainant has also, on investigation reveals how other defendants colluded in committing such fraudulent transaction. XII. There is a clear conclusion drawn by the Respondent at para 34 of the Complaint on investigation that even though Board has indicated its intention for fixed deposit through the covering letter through an entry to that effect on the back of the cheque the Bank Manager and Assistant Manager of Vijaya Bank has effected transfer of funds without verifying the veracity of the letter dated 5.12.2016 stated to have issued by the Board. XIII. It is also averred that amount received by Vijaya Bank were misused and not paid back, it is a loss to the Wakf Board, Banglaore. XIV. That the Defendant No.1, 2, 3, 4 and 10 is arrayed to have received proceeds of crime which was provisionally attached and the complaint is preferred on such persons seeking confirmation of provisional attachment. 9. Despite of admissions made in the complaint that it is loss to Wakf Board, B....
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....to know of the fraud perpetrated, direct his officers to file a complaint which was filed on 2nd January, 2017. The bank was able to recover back an amount which was re-credited to Vijaya Bank on 30.12.2016 from an account maintained with HDFC Bank, Edapally Branch, Kochi to which it was directed to be transferred by the main accused Mr. Vijay Pullijalla of M/s Ajay Sharma Trading Corporation. 14. The main accused /defendants in the Complaint who had committed the fraud have never deposed before the Adjudicating Authority nor have they filed the appeal against the order of the Adjudicating Authority nor have staked any claim on the money lying with M/s Vijaya Bank, Chintamani. 15. The Enforcement Directorate has provisionally attached an amount of Rs. 2,72,74,444/- lying in Account No. 1465000001000157 in the name of Shri Vijay Pullijala owner of M/s Ajay Sharma Trading Corporation. The provisional attachment has been confirmed by the Adjudicating Authority. It is the money belonging to the appellants which is now appropriated by the Respondent Authority. In appeal, it is prayed that the same be released in favour of the Applicant alongwith the interest as the money purely belong....
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....D in favour of the Board. There cannot be any other use of the negotiable instrument. 19. The Bank has not also consulted the CEO of the Board before making such a transfer on the basis of the letter by an unauthorized person. It is also accepted that the cheques were realized by the Bank only on 21.12.2016 and has committed a fraudulent act on 21.12.2016 itself. The CEO after enquiry of the status with the Bank on 29.12.2016 found out the fraud perpetrated on the Board and has immediately filed a Complaint to Chintamani Town Police Station on 02.1.2017 and FIR No.00002/02-01-2017 was filed by the Police. 20. It is also stated in the Complaint at para 30 that "No authorisation to transfer the amount to M/s. Ajay Sharma trading corporation was given by the Board". There being clear averment of the admitted facts, the submission of the Respondent is therefore grossly opposed to the facts admitted in the Complaint. 21. Admitted facts need not be proved as at Para 34 of the Complaint which reads thus: "34. Thus, it is clear from the statement and the documents possessed in this Directorate, the a forged letter was given to Karnataka State Board of WAKFs, Bangalore by and it was pl....
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....for the purpose of securing Fixed Deposit from Chintamani Branch has also specifically endorsed on the cheque that the instrument is drawn on Vijaya Bank, Chintamani Branch as towards Fixed Deposit to be issued in favour of CEO, KSBW. The transfer of the amount credited to third parties was without the authority of law and therefore there arise no obligation on the part of the CEO to comply as there could not have been any other outcome but to secure the Fixed Deposit in the name of CEO, Wakf Board. These arguments specifically addressed by the Appellant has not been considered nor has there been any specific finding on the averments of the Appellant. The order has been passed summarily and confirmed against all the Defendants without discussing the case of appellants property once the Appellant specifically placed reliance on the instructions issued by the Reserve Bank of India in RBI./2005-06/282 DBOD.BP.BC.No.56/21.01.001/2005-06 dated January 23, 2006 wherein the instruction was titled "Collection of account payee cheques- Prohibition on crediting proceeds to third party account". The instructions issued by the RBI is as follows: "As banks are aware an account payee cheque is ....
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....f the defendants in the complaint filed by the Respondent Authority. The respondent authority only states that the CEO of the Board accepts placing the money in Fixed Deposit with a Bank on the same day the proposal was mooted by the First Division Assistant, which was verified by the Chief Accounts Officer and the file was forwarded to the CEO who accepted to opening of Fixed Deposit at Vijaya Bank (which is a Nationalised Bank), Chintamani Branch. 30. In the complaint it is also stated that the CEO has not followed up with the staff for securing the FD receipts during the period from 26.11.2016 till 29.12.2016. These are the only two observations by the investigating authority which has not resulted in any manner abetting the commissioning of the fraud as it was not shown by the investigating authority that the CEO also had to oversee or follow up with the office staff for securing the Fixed Deposit Receipt when his functions in the Board is to take policy decisions and not to follow up with day to day work of the Board. In the complaint it is clearly stated that the Cheque was cleared on 21.12.2016 and therefore the CEO has acted within few days of the cheque being cleared. Th....
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....Officer representing Karnataka State Board of WAKF who had to secure the deposit from the Bank, the question of therefore arraying him as a Defendant in the proceedings was unnecessary. 35. The CEO of the Karnataka State Board of WAKFs not being a person in possession of any proceeds of crime and not being proceeded against for provisionally attaching any property under sub-section (1), question of filing a complaint under the Act for attachment on such person is therefore without any valid reason. The impugned order has not recorded any finding on the averments made by the Appellants. Further the complaint at para 39 has also recognised that the funds belonging to Karnataka State Board of WAKF was misused and not paid back and that it was a loss to the Board. 36. In view of the above the Board is not in possession of any proceeds of crime under section 5 of the Prevention of Money Laundering Act, 2002 as the office of the Board has taken immediate action and recovery steps by filing an FIR in the Jurisdictional Police Station. The CEO of the Board has noted on the file that the money was not intended for any other person or for transferring it to any other account. The cheques ....